James Riley
March 22, 2016

Procurement is not a dirty word

Policy

Procurement is not a dirty word

Paul Shetler: Procurement changes will be central to the improvement of digital services

If you ask the Digital Transformation Office chief executive Paul Shetler which of the DTO’s many projects he gets most excited by, he says it’s the digital marketplace.

This is not the answer many would expect. Seriously. Procurement? Who gets excited about procurement?

Of all the whole-of-government projects that involve transformation, agility cultural change, and all the other heavy-breathing of the digital world, a platform that makes mundane government procurement more efficient seems very dull indeed.

But if the DTO is to be an agency of change – both cultural and institutional – then you start to see where Mr Shetler is coming from.

If you can change the way that government buys its technology, then you can more easily change the way it delivers its services. It enables the overhaul all of the thinking behind service delivery and the processes that enable it.

That makes procurement a powerful lever. And it makes the DTOs digital marketplace – which is at its heart a radical overhaul of the way government buys stuff – very exciting indeed.

It’s a sweeping generalisation (which is nonetheless true) that the Commonwealth right now is terrible at service delivery. Terrible.

I have an urgent issue that requires I call Centrelink, but I have been putting it off for more than four months because the money this call will save me is not worth the pain of making it. I know I will have to make the call eventually, but right now I would frankly rather get poked in the eye with a blunt stick than sit on hold waiting for those people.

So here’s the thing. The Commonwealth’s dreadful service delivery is directly tied to its procurement processes. They are outdated and inflexible and inconsistent with the language of agility, innovation, transformation, or even the word digital.

The obsession with outsourcing that started in the Howard era in the late 1990s and early 2000’s became a bad habit. The strategy was supposed to outsource project risk, while delivering lower cost and better outcomes.

But the process has hollowed-out the Commonwealth’s core tech skills. Big projects are now riskier than ever, and yet the internal ability to deliver them is eroded. The government has actually onboarded risk as a result.

Once a project is set in motion, it is difficult and costly and time-consuming to change – even when it is clear the project is not heading in the right direction. And they are still called “IT Projects” rather than a product or service. This locked-in thinking is a factor of procurement.

The digital marketplace being developed at the DTO is meant to radically simplify all this – to make it easier to buy stuff, and to make it simpler to stop buying stuff. It’s an eBay-like service (for want of a better descriptor) that lets everyone see prices and services packaged in a transparent shop-front.

Transparency is key. As a citizen, I can see which suppliers have sold to which departments and at what price. I can compare the prices different companies charge for the same service, and the ratings those companies have earned from users. I can see cumulative sales value of each vendor over the years – very clearly and all in the one place.

The DTO’s digital marketplace is in its embryonic phase (they are currently in discovery mode). It expects to have a beta developed by the middle of the year, and a working Live beta in early 2017.

Mr Shetler says fixing tech procurement is a fundamental to the entire digital transformation program across the whole of government.

Which is a little weird, because procurement policy – and many panels – are the responsibility of the Department of Finance. Which is inert on the issue.

It would surprise no-one that the DTO is creating its own Digital Service panel to make it easier for government departments and agencies to find the specialist digital skills they need to carry out the transformation program.

This gives the DTO some hands-on with a set of suppliers that may also provide the nucleus for an early marketplace prototype. It will also give departments half a chance of finding digitals skills rather than relying on the poorly defined and badly constructed resources like the Cloud Services Panel.

In the meantime, we know procurement is hot topic inside this government. How else to explain the Treasurer devoting a whole section to procurement issues in the launch of his FinTech agenda this week.

The Commonwealth spends more than $60 billion annually though more than 69,000 contracts with suppliers. Every percentage point of saving derived off a more efficient management of payments for these contracts is real money.

The Commonwealth spends more than $6 billion a year on its IT systems and people. A marketplace overhaul of procurement processes – something to shine the light on the crushing burden of blunt-force oversight – holds great promise for hefty savings (and ultimately better service delivery.

Anyway, we this is important. And so does the freshly-minted Assistant Minister for Digital Transformation Angus Taylor.

It is understood Mr Taylor will visit the FinTech hub Stone & Chalk on Wednesday (today) to discuss procurement innovation (apparently called ProcTech, although we’re not sure by who!). This is interesting.

It is also interesting that a senior data policy adviser from within the Department of Prime Minister and Cabinet Tim Neal has been seconded to Mr Taylor’s office. Tim Neal’s open data policy expertise will certainly fast-track the minister’s understanding in what is a critical area of innovation policy development.

There is a huge amount going on right now inside this government. There are big process and infrastructure-related issues that are being dealt with in a methodical way.

Reform of procurement is one area. The overhaul of public data policies is another. These are not sexy issues. But each can deliver a huge and lasting positive impact not only on the budget, but on the economy.

It doesn’t get written about much, but it’s genuinely exciting. I can't be the only one who gets switched on by this stuff, surely.

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